The Influence On The Value-relevance Of Fair Value

Since the 20th century of 80 years, the United States break out a large number of financial institutions in insolvency cases, but based on the historical cost measurement model of financial reporting in these financial institutions, financial crises are often preceded by also shows "good" business performance and "health" financial position. Thus, many investors believe that historical cost-based financial reports not only failed to give investors the financial regulatory and warning signals, but misled the investors in those financial, institutions to determine, based on this background to adopt the fair value of accounting for an increasing demand, supporters believe that fair value accounting allows financial regulatory agencies, and other users of financial reports was informed earlier, financial institutions are facing financial difficulties.In February 15,2006, the Ministry of Finance formally issued a new Accounting Standards System. The stipulation takes the lead from January 1,2007 in the listed company, and encourages other enterprises to carry out. In this new accounting guidelines issued by, the biggest highlight is the introduction of fair value. In the Ministry of Finance issued new accounting standards system, The fair value is defined as "the fair value measurement, the assets and liabilities in accordance with a fair trading, familiar with the transaction voluntary on both sides of the exchange of assets or liabilities measured the amount of liquidity." As one of the biggest highlights of the fair value of widespread concern, whether in the accounting theory and practice realm, or-in the accounting standard setters and supervision organization, have aroused intense argument。However, in March 2007, New Century Financial bankruptcy, the sub-prime crisis in the United States broke out, followed by sweeping the world. In this financial crisis, the accounting treatment has been accused of too rapid to reflect a true and listed the company's financial situation, while all walks of life have blamed fair value measurement is the accomplice of the financial crisis.what's more, some pointed out that the measurement should be re-using the historical cost instead of fair value measurement. So for China's national conditions, for listed companies in China have just been introduced the fair value measurement if they should re-use of historical cost to measure it? Or the historical cost measurement really is more than the fair value measurement advantage? In this paper, we take the China's listed banks as an example, using standardized research and empirical method of combining test launch of the fair value of related research. For the fair value measurement is to adapt to the application of China's financial sector to provide empirical support, so as to fair value measurement adaptive research in other areas play a role in attracting valuable opinions. This article is based on data from China's listed banks, as empirical research samples, further argues that fair value measurement of a bank's financial profession, represented by the application present situation.This article take 2007-2008 china's A-share listed Commercial bank data as the research object, and select the sample banks annual report and the semi-annual reporting data, after having eliminated the data incomplete sample, altogether obtains 51 groups. Through the use income model (the R-E model) and the price model, has obtained the fair value to each income (each net profit) and each net profit market factor and so on adjustment volume as well as stock price co-relational dependences.Regarding this, this article through theoretical analysis and empirical methods, obtains the main conclusions are:The sample R-E model with empirical test results show that changes in fair value of the annual profit and loss and stock returns have a stronger relationship, and its relationship to positive correlation. This shows that since January 1,2007, China's listed banks after the introduction of new accounting standards, the stock market approves the fair value to the accounting earnings (net income per share) adjustment value, it can adjust the accounting earnings the value of the response made to the same direction, according to fair value adjustments to accounting earnings, the stock market will rise corresponding to the market price of the stock, so that rate of return on equity has improved; the contrary, the market will fall, thus making the stock's return rate.Price model of the total sample using an empirical testing, through the use of China's listed banks in 2007-2,008 years of data from empirical data, the results showed that exist significant relationship between the changes in fair value gains and losses and the stock price, which is consistent with our hypothesis 2. Under the new guidelines for the preparation of financial statements, the use of fair value increases the value relevance of accounting information, which indicates that the fair value of net income per share of China's listed banks of the information content significantly affected.When uses to the total sample the price model carries on the empirical examination, we also through the introduction the changes of available for sale in fair value as variable in this empirical study. The empirical study result indicated: the market holds a positive attitude for the listed bank of our country, which the increase available for sale financial assets in listed bank resulting from an increase in the fair value of the net assets. Therefore, available for sale financial assets of per share, net changes in fair value was positively correlated with the stock price. This is consistent with our hypothesis 3, from the perspective of assets that under the new guidelines in the preparation of financial statements, the fair value of the use of significantly increased the value relevance of accounting information. It showed that the listed banks have a significantly effect on the fair value of net assets per share about the information content.This study results can effectively eliminate the financial crisis should continue to use the fair value of the doubts in our country, using the fair value measurement is not the root causes of the financial crisis generated. Corresponds to, the use of fair value measurement can improve the stock price of China's listed banks relevance, better able to reflect the true value of the assets of China's listed banks in the actual situation. From this analogy, we can further predict the fair value measurement of the implementation of China's listed companies will be more realistic and fair reflection of the value of the assets of China's listed companies, will help the information needs of those who make the right decisions. However, the criterion is only a technical specification of accounting information generated in the practical application, or there are more hidden dangers, therefore, this writer, at the end of the article with the theory of empirical findings and related analysis of how China can effectively implement the fair value of the modeling has proposed a corresponding countermeasures and suggestions.